- •Compliance Sample Questions – Final Exam
- •1. Briefly explain financial stability and its importance to shareholders, depositors, taxpayers etc.!
- •2. Briefly explain goals, tasks and enforcement powers of banking supervisors!
- •3. Briefly give an overview of the European and the Austrian banking supervisors: Name them Their roles and tasks Cooperation between European and Austrian banking supervisors
- •4. Briefly explain the function of the Banking Union and the Single Resolution Mechanism (srm/ssm)!
- •5. Briefly explain significant banks and name some of Austrian significant banks!
- •6. Briefly explain the system of the Austrian (national) banking supervision system!
- •7. Name and briefly explain the roles of external banking supervisors and internal control authorities (within banks)!
- •8. Briefly explain the 3 lines of defense!
- •9. Briefly explain the role of Compliance within a bank:
- •10. Briefly explain the Standard Compliance Code!
- •11. Name essential aspects/topics regulated in the Compliance Manual!
- •12. What are areas of confidentiality? What is the function of them?
- •13. What is understood by compliance relevant information?
- •14. What is understood by insider trading and/or market manipulation?
- •Insider trading:
- •15. Explain the Watch List and the Restricted List!
- •16. Briefly explain Front Running!
- •17. What does a bank employee have to do in case of knowledge of compliance relevant information?
- •18. Briefly explain the tasks of a bank employee in case of employee transactions (he/she wishes to trade securities)!
- •19. What are the tasks of bank employees who work in areas of confidentiality in case of employee transactions (he/she wishes to trade securities)!
- •24. Briefly explain different types of corruption!
- •25. Why is it important to know if a person is engaged in the private sector or if a person is a public official (in the context of combating corruption)?
- •26. How are banks combating corruption? Why and what are there different internal regulations in case private sector or public officials?
- •27. Briefly explain Money Laundering and Terrorism Financing!
- •28. Briefly explain the 3 steps of Money Laundering!
- •29. Briefly explain some of the risks factors in order to identify Money Laundering and/or Terrorism Financing!
- •34. Name situations when a Know-Your-Customer (kyc) check is not necessary!
- •35. Briefly explain prohibited business relations!
- •36. What are the main tasks of the money laundering officer within a bank?
- •37. Give a detailed overview of steps/requirements by a bank employee in order to fulfill the rules of conduct (§ 38-62 ssa)!
- •38. Which information a bank is to give to its customers to fulfill the rules of conduct?
- •39. Explain the different customer definitions and explain the consequences of the customer classification in order to fulfill the rules of conduct!
- •40. For which customers a bank must prepare a customer profile? Which information does a bank employee need to prepare the customer profile? What are the consequences of a customer profile?
- •41. Explain the differences of transactions requiring advisory/clarification and transactions without advisory/clarification!
- •42. Briefly explain the requirements for the execution of orders by retail customers? What is understood by Best-Execution-Policy?
- •43. Is doorstep selling allowed in Austria?
- •44. Explain and give examples of essential risks regulated in the ssa (in context with securities business)!
- •45. Explain essential differences of the roles and tasks of internal auditors and external auditors!
- •Internal Audit
- •46. Name essential stakeholders of the internal audit function! Explain the interaction between them and the internal audit function!
- •47. Briefly explain the steps of audit planning (internal audit): Risk based planning versus mandatory audit fields!
- •48. Briefly explain Material Misstatement and possible consequences thereof!
- •49. Explain Audits risks and how external auditors can mitigate them!
- •50. Explain the 4 types of (external) Audit Opinions! Which type do banks require for assessing the credit risks of customers?
42. Briefly explain the requirements for the execution of orders by retail customers? What is understood by Best-Execution-Policy?
Best-Execution-Policy § 52 - 54 SSA
• Preparation of an Execution Policy
• Execution of trades (purchases/sales) based on the Execution Policy
• Best practices and results for the customers
• For achieving best results for customers
• Efficient arrangements
• Proper measures by the servicing legal entity
• Information to the customer
• Approval of customer necessary (depositary contract)
• Audit of the measures and the Execution Policy once a year
Execution of Customer Orders/§ 55 - 57 SSA
• Application of procedures and systems for
• proper
• prompt and
• quick
• execution of customer orders
• Customer orders shall
• be correctly registered and categorized
• in order (the early before the later) and
• promptly executed
• In case of disruption immediate information to private customers
• Definition of aggregation of orders (not to the disadvantage of the customer)
43. Is doorstep selling allowed in Austria?
Home visits for the purpose of sales of financial instruments are permitted only upon prior consent and invitation by a customer (Consumer Protection Act).
44. Explain and give examples of essential risks regulated in the ssa (in context with securities business)!
Advisory risks (= risks of non proper advisory):
Non proper documentation of customer profile or advisory of customers
Missing attention for customer complaints
Customer profile only of one person but not all authorized persons
Missing time capacity for key account management
Non proper transfer and storage of documents
Risks of misunderstandings (sender - addressee problems)
Transaction risks:
Non or late transfer/execution of customer orders
Execution of customer orders without taking risk class of customer into account
Missing documentation of execution of customer orders
Conflict-of-Interest:
Risk of purchase/sale of products from issuers with high (out of markets) fees that are not in the interest of the customer
Block orders
Special interests of certain advisors
Inside information (proprietor trading)
Documentation: missing contracts with sales partners, service partners (outsourcing)
Outsourcing: e.g. non delivery by service partner
IT risks: e.g. deletion of documents
45. Explain essential differences of the roles and tasks of internal auditors and external auditors!
Internal Audit
•FMA Minimum requirements
•Audit
–Integrity
–Correctnes
–Effectiveness
=> of the entire bank
Prevention of money laundering and terrorist financing
–Implementation of measures
•Risk analysis
•Implementation and development of proper measures
•Monitoring of measures
–Monitoring of transactions and business relations
•Permanent and independent function
–Free access to all required information
–Autonomy of decision
–Comprehensive authority to instruct staff members
External Audit
•Correctness of correct and thorough appraisal of an entity's financial controls and statements (provisions, depreciation, etc.)
•Banking Act, CRR
•SSA
•Loan provisions
Audit of Annual Financial Report
–Increase of trust of persons using annual financial reports
–By external auditor´s report (auditor´s opinion)
•Auditor´s opinion on the financial statements to make sufficiently sure that they are free from material – intended or unintended - misstatements and errors
=> Materiality